AB 527 and AB 1320 – County Specific Event Privileges

Currently, there is an exception to the restrictive tied-house regulations that allows beer manufacturers and other license types in Los Angeles County to sponsor events and purchase advertising directly from or on behalf of “live entertainment marketing companies.” AB 527 and AB 1320 respectively create a similar exception for events associated with live entertainment marketing companies in Napa and San Diego Counties.

AB 527 was enacted in an effort to boost the economy in Napa County following a damaging earthquake in August 2014. The law will expire on January 1, 2019 though, unless of course additional legislation steps in before that time.

The terms of AB 527 require the live entertainment marketing company to be a wholly owned subsidiary of a live entertainment company, and not publicly traded. Also, the entertainment company must have its principal place of business in Napa County. Notably however, it is of no importance if the company also owns interests in a retail or winegrowers license, whether directly or indirectly. Rather, the only limits applied are that the event not take place at, and the purchased advertising cannot be placed in, any premises licensed as a retailer or winegrower that shares such ownership interests.

The event itself must be located within Napa County, at a venue providing “artistic, musical, sports, food, beverage, culinary, lifestyle, or other cultural entertainment.” The venue must also expect a daily attendance of at least 5,000 people, and must somehow be connected to one of the forms of the cultural entertainment listed earlier. Furthermore, the event must not be held more than three times in a year. The company hosting the event is required to warrant as much, in writing, to any retail licensee participating in the event. Importantly, the event must also serve other, competing brands than those manufactured by the sponsors of the event.

The agreement to sponsor or purchase of advertising space must be in writing, and cannot be conditioned directly or indirectly on the purchase, sale, or distribution of alcohol. Additionally, the law specifies that it does not authorize a beer manufacturer to purchase advertising space or time directly from or on behalf of an on-sale retail licensee. Lastly, any solicitation or coercion by a retail licensee, to purchase advertising or sponsor an event is a criminal offense, whether directly aimed at the beer manufacturer or indirectly aimed through a wholesaler – and that is on top pecuniary penalties and possible license revocation!

AB 1320 accomplishes a comparable feat for San Diego County, although it is limited to events organized and conducted at the San Diego Fairgrounds in Del Mar. While the law was clearly drafted to cover one specific event, it takes effect immediately and covers events that will promote artistic, musical, sports, or cultural entertainment. The event must not span more than four consecutive days in which approximately 100 acts will perform before approximately 20,000 patrons. Specifically, the marketing company must be a Delaware limited liability company, but allows up to 25% common interest with a winery. That winery must not be the only brand of beer, wine, or spirits served, however. The same rules about coercion and solicitation apply of course, and while the advertising and sponsorship are allowed, the general ban on giving things of value to retailers remains in place.